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The UK’s Video Games Tax Relief has driven an estimated £2.4 billion in additional economic growth since it was first introduced in 2014.
That’s according to analysis by Games Investor Consulting, shared with GamesIndustry.biz, that also shows the Treasury has issued over £1.1 billion to UK companies between 2014 and 2022.
According to the company’s estimates, the UK games development sector has invested £1.2 billion in over 15,000 new creative roles since VGTR was first announced in 2012.
Overall, VGTR has helped games companies generate and protect close to 18,000 development jobs, as well as another 32,000 jobs elsewhere in the supply chain.
This represents over £3 billion in new GDP contributions from games since 2012.
GIC also offered insight into how the development landscape has grown in the years since the tax incentive was announced.
In 2011, following “four straight years of headcount decline” and over 200 company closures, there were only 330 games development studios in the UK, with a total workforce of less than 9,000 people.
Major international games companies had been shutting down the UK studios and pouring investment into other markets such as Canada, the US and France. Between 2008 and 2001, the average change in headcount was a decline of 3.5% per year.
“If that decline had continued, it is likely that the UK games development sector would be a fraction of today’s, under pressure from increasing state subsidies in Germany, Australia, Poland, Netherlands, Belgium, Scandinavia, US and Canada amongst others,” Games Investor Consulting wrote in its analysis.
Between 2012 and 2014, the two years between VGTR’s announcement and introduction, the industry averaged at 7% per year growth in headcount. This rose to an average of 10.1% growth per year between 2014 and 2023.
In fact, GIC reports growth has been continuous since 2012, with a record 24,000 games development staff recorded in the company’s 2023 survey for trade body TIGA.
“Video Games Tax Relief has been transformational for the UK video games industry,” said Richard Wilson, CEO of TIGA. “VGTR has enabled our sector to compete on a more level playing field against our overseas competitors, especially in North America.
“VGTR has created thousands of jobs, spurred millions of pounds in investment and boosted economic growth. It has contributed to a renaissance in the UK video games industry.”
Video Games Tax Relief will be replaced in January 2024 by the new Video Games Expenditure Credit, which was announced in the UK’s Spring Budget earlier this year.
The government announced the new games credit will over a relief rate of 34% on 80% of qualifying expenditure – seemingly a marked improvement on VGTR’s 25%.
However, TIGA has since warned that this 34% is claimed as an income receipt, which is subject to corporation tax, and is more realistically closer to 25.5% and a less than 1% increase on VGTR.
The trade body has warned growth “could be jeopardised” unless this is improved.
